The POS protocol is designed to reduce energy expenditure to a minimum by eliminating the need for elaborate computation and intense power consumption, thereby making it “much more environmentally friendly, low on energy usage, and faster than its competitors to process transactions,” Zagari argues.
Cardano’s ADA also diverges with ether in regard to its monetary policy. Unlike ether, the supply of ADA is limited. Like bitcoin, whose supply is capped at 21 million, ADA’s maximum supply is set at 45 billion, of which 32 billion coins are currently in circulation, according to CoinMarketCap.com.
Moreover, cardano’s upcoming Alonzo Hard Fork upgrade will dramatically expand its functionality. “Alonzo will allow cardano to become a major player in the decentralized finance (DeFi) space by incorporating smart contract functionality, facilitating automated cryptocurrency lending and trading,” says Zagari.
Currently, the booming US$100 billion DeFi industry is dominated by ethereum, but cardano promises to do it better.
Smart contracts are self-executing agreements that live on the blockchain. They can be deployed to automate the execution of an agreement,l and are used to verify and record transactions without the need for an intermediary.
“This long-anticipated Alonzo Hard Fork upgrade will bring forth a surge of interest and have developers strongly consider building their DeFi applications on the network,” Zagari contends. The move could create a positive momentum and drive up ADA’s valuation.
Is cardano a good investment in 2021?
The broader crypto market has rebounded since its stomach-churning crash in May 2021, which wiped $1 trillion in crypto valuations. ADA was one of the fastest to recover and has now far surpassed its May peak, while its bigger rivals are still trading well below their all-time highs.
ADA’s year-to-date rise has been even more dramatic. The virtual tender was worth a measly US$0.17 at the end of 2020, but its price skyrocketed in 2021, breaching the US$3 mark on Sept. 1, making it the world’s third-biggest cryptocurrency by market capitalization. While its US$84 billion market cap, as of Sept. 11, 2021, is roughly one-fifth and one-tenth that of crypto heavyweights ether and bitcoin, respectively, ADA has clocked a staggering 1,450% return for the year to date, dwarfing bitcoin’s 55% and ether’s 343% gains, according to Coinbase data.